Lamps Plus v. Varela
Lamps Plus is a California business that exposed its employees’ personal information to hackers, who stole the identity of and filed a tax return in the name of employee Frank Varela. Varela sued Lamps Plus on behalf of a class of others harmed by the data breach, and Lamps Plus moved to compel arbitration under a provision in Varela’s employment agreement. Lamps Plus also argued that the agreement authorized only individual arbitration, and not class proceedings. The district court granted the motion to compel arbitration, and also held that the broad terms of the arbitration allowed class proceedings. Lamps Plus appealed, and the U.S. Court of Appeals for the Ninth Circuit affirmed the district court in a short, unpublished opinion based on the unique language of the arbitration agreement.
When Lamps Plus filed a petition for certiorari, arguing that the Ninth Circuit’s decision violated the Federal Arbitration Act, Public Citizen assisted Varela’s counsel in preparing the brief in opposition. After the Court granted the petition, Public Citizen served as co-counsel, drafting the brief on the merits.
On April 24, 2019, in a 5-4 decision, the Supreme Court held that it had jurisdiction because an order that both compels arbitration and dismisses the underlying claims qualifies as a “final decision with respect to arbitration.” The Court also held that, under the FAA, an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration. Once again applying a strong preference for arbitration, the Court thus reversed the court of appeals’ decision.
See the complete Supreme Court docket for this case here.